Question 6 (3 marks):
Lolita Corporation has conducted its annual review of intangible assets and after liaising with the external
auditors, it appears that the carrying values of Trademarks and Patents differ from their fair values.
Trademarks
Patents
Values in Lotia's Books
$140,000
$200,000
Fair Value as determined by the Auditors
$110,000
$150,000
Instructions
Record the journal entries required to recognize the difference between the carrying value of the
intangible assets and their fair value as of 01.01.2022.
What impact on Lolita's Profit & Loss account will this transaction have?
Answer